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RBI’s open market operations could ease liquidity and flatten yields, say experts.mint (MINT_PRINT)
RBI’s open market operations could ease liquidity and flatten yields, say experts.mint (MINT_PRINT)

RBI keeps status quo on key rates as it forecasts 9.5% GDP plunge

  • RBI Governor Shaktikanta Das announced that the MPC has kept status quo on rates
  • RBI maintains its accommodative stance

RBI Monetary Policy: The Reserve Bank of India Governor Shaktikanta Das today announced the policy decision of the Monetary policy committee. RBI's MPC began its three-day deliberations on Wednesday. This is the first meeting of the new MPC which was formed after the appointment of three three eminent economists – Jayant Verma, Ashima Goyal and Shashanka Bhide.

The meeting of the six-member MPC, earlier slated for September 29 to October 1, was rescheduled as the appointment of independent members was delayed. The MPC must have a quorum of four.

RBI Monetary Policy statement: These are the highlights.

  • Will extend scheme for co-lending to all NBFCs, HFCs, says Guv Das.
  • Reserve Bank of India stands ready to undertake further measures as necessary to assure market participants of access to liquidity and easy finance conditions: Shaktikanta Das, RBI Governor.
  • Food grain production set for record highs, says Guv Das.
  • Current inflation hump transient; agriculture outlook looks bright, oil prices to remain rangebound: RBI Governor Das.
  • RBI to maintain comfortable liquidity position; 20,000 crore-OMO auction next week, says Governor Das
  • 24*7*365 availability of RTGS for high value transactions from Dec 2020.
  • Focus must shift from containment to revival, says Das.
  • On-tap TLTRO of 1 lakh crore to be made available till March 2021, says Guv Das. It will be linked to repo rate.
  • Real GDP to decline by 9.5% with a risk towards downward revision, says Shaktikanta Das.
  • India likely to see a 3-speed recovery, says Guv Das.
  • Indian economy entering into decisive phase, seeing easing of contraction in various sectors. Deep contractions of Q1 are behind us & silver linings visible in easing caseloads across India, says Guv Das.
  • GDP growth may turn positive in Q4, says RBI Governor.
  • RBI maintains its accommodative stance.
  • RBI Governor Shaktikanta Das announced that the MPC has kept status quo on rates. Repo rate 4%. Reverse repo rate 3.35%.
  • The rupee strengthened by 9 paise to close at 73.24 against the US dollar on Thursday, supported by positive domestic equities and weak American currency. At the interbank forex market, the rupee traded in a narrow range. It opened at 73.29 against the American currency and gained further ground to settle at 73.24, up 9 paise from its previous close of 73.33.
  • Retail inflation in India likely rose further above the central bank's medium-term target last month as food prices climbed due to lingering supply disruptions, a Reuters poll found, reducing the chances of another interest rate cut.
  • Sensex opened flat at 40,256, while Nifty at 11,863. Banks and rate sensitive stocks are in focus as RBI Governor Das will announce policy decision soon. Read more here
  • Four things to watch out for from today's RBI policy

Rate Action: The MPC is likely to ensure continuity of policy.

MPC Voting Pattern: The newly inducted members are supposed to have lent a dovish tilt to the MPC.

Forecasts: Economists are also expecting RBI to provide inflation and growth projections for the first time since the February 2020 meeting.

Liquidity: The market is waiting for RBI’s views on the large banking-system surplus liquidity. Read full story here

  • Experts expected RBI to maintain status quo on the benchmark lending rates in view of the inflation. In the last monetary policy review on August 6, the RBI chose inflation as its priority.

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